On March 23rd, Professor Yao Wang, the Director-General of the International Institute of Green Finance (IIGF), joined the Economist’s virtual fireside chat with Martin Adams, the editor for Executive Education of the Economist, to talk about how China plans to sustain and develop its economy, society, and environment based on its 14th Five-Year Plan. Professor Wang gave a detailed explanation of China’s climate goals and the role that green finance plays in achieving carbon peaking and carbon neutrality goals. This fireside chat was a part of the Economist’s 7th annual Sustainability Week. The event brings together industry experts and practitioners from around the world to discuss how society can take a more practical approach to sustainability and climate protection.
Prof. Wang Yao introduced China’s strategic objectives concerning climate and emissions reductions. Under the 14th Five-Year Plan guidance, China is working to create a more detailed roadmap for carbon reduction and introduced the “1+N” policy package released last October. Professor Wang specifically talked about one of the most critical elements of the package – the “Action Plan for Carbon Dioxide Peaking Before 2030,” which outlines specific carbon reduction goals in areas such as energy storage capacity, household waste utilization, recycling, transportation, and carbon accounting standards.
With years of working experience in green finance, Professor Wang shared her insights on green finance development in China. She pointed out that green finance in China had started to get more prominence since 2016 when seven ministries jointly launched the milestone document “Guidelines for Establishing the Green Financial System.” Prof. Wang also introduced the comprehensive Chinese policy framework that supports the mobilization of a wide range of financial policy tools from central banking, financial regulation to taxonomies and guidelines. She specifically mentioned the monetary incentives and disclosure requirements as one of the most effective policies. Professor Wang also touched on innovative green products and local pilot projects that played a significant role in supporting China’s green transition.
While green finance has already played a significant role in the green transition, challenges still exist. Professor Wang mentioned the lack of awareness and incentives for stakeholders to support green development and the need to increase innovative green products as areas for further improvement. “Another huge challenge in green development is how to balance energy consumption and intensity targets with economic development. Some cities in China still base their economic structure on heavy industry.” Professor Wang talked about her research in a Chinese city known for copper production. The local governments seek solutions to achieve climate goals while developing their economies. Professor Wang will conduct more field research to understand local situations and provide recommendations for sustainable development. Part of the solution could rely on utilizing natural capital resources to grow the economy through eco products or eco-tourism.
Professor Wang highlighted that China wants to play a role of a responsible country that actively participates in global climate discussions and negotiations and demonstrates its commitment through its various policies. “Addressing climate change is one of the key cooperation areas,” she commented. “I think China will continuously be very active in international cooperation and negotiation on climate change.”